Chicago public school teacher Michelle Harton walks a picket line outside Morgan Park High School in Chicago on the second day of a strike in the nation's third-largest school district.

Chicago Mayor Rahm Emanual and school officials say only so much money can be squeezed out for teachers’ salaries. More important, they want major changes to fix schools that they say are failing the city’s kids. On the other side of the table, the Chicago Teachers Union (CTU) has its doubts about the finances and frets about protecting its rank and file. It especially doesn’t like the way charter schools are opening and public schools are closing, wiping out its members’ jobs.

That’s the much-reduced nub of the dispute between the Chicago Teachers Union and city officials, which has drawn 26,000 teachers into the streets and thrown the nation’s third largest school system into a tizzy. Outside Chicago, you can find the same mega issues pumping up like storm clouds in school districts across the U.S. This is why what happens here could be an omen for school districts, stirred on by a heap of forces ranging from deeply deflated budgets to educational reformers’ complaints to dissatisfied parents to charter-school activists and ultimately to anti-union advocates.

Taking office as mayor last year, Rahm Emanuel set the cycle in motion when he aligned his administration clearly with those who have decried the heartbreaking conditions in the nation’s public schools. He brought in Jean-Claude Brizard as the new schools chief executive, someone with a reputation for supporting school reform but a history of feuding with teachers. Emanuel vowed to lengthen the school day and made a number of steps to nudge the union to go along.

The mayor named a school board in sync with the swirl of reforms popular across the country. He got support for his efforts from the Democrat-led state legislature, which made it more difficult last year for the Chicago teachers to strike with a law that required 75 percent approval for a strike. (In this case, the teachers voted by more than 90 percent to walk out.) It was part of a package that included moves to link teachers’ tenure and security to their performance.

In a city where Democrats have seemingly ruled forever and where unions either got their sway or were not attacked head on, Emanuel changed that formula by standing up to the union. He also got off to a bad start in early talks with the union’s president, who had been elected on a campaign of showing more spine in negotiations. Their toxic beginning may have added an extra jinx to the contract talks. The union has since made Emanuel’s treatment of it a rallying point, saying it wouldn’t give in to a “bully.”

Whatever the union thinks of Emanuel is hardly as important as what comes out of their contract dispute. If a big-city Democrat with such outstanding party credentials as Emanuel is seen as squashing the teachers’ union, that doesn’t bode well for the Democrats nationally in their quest for union voters. Nor does it help the American Federation of Teachers as it fends off challenges in places far less friendly to unions than Chicago.

As is the case for many school districts, pay is a basic issue for both sides in Chicago, especially since Emanuel canceled a pay hike for teachers last year, saying the schools couldn’t afford it. The city went into negotiations this year, offering a 2 percent annual pay hike, and the teachers replied by asking for as much as 30 percent over two years. School officials countered with a 16 percent pay hike over four years, according to news reports.

But a more critical issue for the union nowadays is guaranteeing a future for its members—not an idle concern here and across the country. One threat comes from charter schools, which have taken off in the last decade and in Chicago have reached a total enrollment of 52,000 students at 118 schools, according to the Chicago Tribune. Though these schools’ performance has been mixed, school officials seem intent on opening more with public funds as they close poorly performing public schools. This is a losing proposition for the union since the charter schools are largely non-union. They also lower the negotiation bar for the CTU since they provide lower salaries. The possibility of deep and steady job cuts as a result of changes throughout the school system also adds to the union’s need to lock in a recall policy to protect its members from disappearing from the city’s payroll. This reportedly is one of the key stumbling blocks in negotiations.

An even more contentious issue is teacher evaluations, a point on which teachers and school officials nationally are locked in a power struggle. Chicago school officials have been pushing to link pay and seniority to performance—and not seniority alone—as well as to carrying out the evaluation system called for by the state legislature last year. The union has pushed back, however, warning that the new evaluation system could result in the loss of 6,000 jobs in two years. Too much of the new evaluation system will be based on students’ standardized tests, according to the union.

Who is going to win the struggle?

There’s no question that some of Chicago’s schools, like those in many communities across the U.S., are overwhelmed by poverty and are suffering from decades of neglect by school headquarters and political leaders. Once considered “dropout factories,” Chicago’s schools have bolstered their graduation rates in recent years. But as a University of Chicago study pointed out last year, the overall graduation rate doesn’t tell the whole story. The study found “large improvements in outcomes” in high schools but “very little” in the elementary schools. Average test scores were at levels “well below” those used to measure success in college. And black students were increasingly falling ever further behind others.

In one of the nation’s most segregated school districts, students in some black and Latino neighborhoods are besieged by an unprecedented cycle of violence. Troubled by this, Chicago officials were able to bring in hefty amounts of outside financial support for anti-violence efforts in recent years. But those funds have severely dried up—the violence has not.

Elsewhere, the violence may not be as severe, but it would be hard to find school districts with equally large numbers of poor and minority students without the same education problems and gaps. Elsewhere, the daily despair encountered by teachers and parents may be as troubling. But because the Chicago school system is so enormous and enormously troubled, the solution to its woes transcends its borders. That’s why the teachers' strike matters to more than 350,000 Chicago kids.